The FBI has issued a subpoena to Rosenow Spevacek Group, Inc. - a government consulting business located in downtown Santa Ana - demanding that the company turn over documents related to the city of Palm Springs, according to the firm’s principal, Jim Simon.
Law enforcement officials raided Palm Springs City Hall on Sept. 1 and carried out “volumes of paperwork,” The Desert Sun reported. The raid occurred after the newspaper published articles revealing that the mayor was a paid consultant for a developer who purchased land from the city at questionable prices.
Rosenow Spevacek Group (RSG) Inc. put together the price estimates that city officials used as the basis for their real estate dealings. The Desert Sun reported that the city’s redevelopment agency bought a lot in 1987 for $575,000 and sold it to local developer Richard Meaney in 2014 for $195,561. That amount was likely far below the lot's market value, but almost equal to the price estimate RSG Inc. had produced.
That same year, Meaney had bought an adjacent parcel for five times that amount, the newspaper reported.
The newspaper also pointed out that RSG, Inc. – which has done work for several public agencies in Orange County and once employed former Santa Ana Councilman Mike Garcia -- came to its price estimate by using comparable sales across the Coachella Valley, but outside Palm Springs’ city borders. A real estate expert quoted by the newspaper said it was not a professional valuation.
In an interview with Voice of OC, Simon defended the price estimate. He acknowledged that it wasn’t a professional appraisal, but said it wasn’t intended it to be.
According to Simon, the price estimate was part of a property management plan required for submittal to the state as part of the unwinding of redevelopment agencies, which were axed by Gov. Jerry Brown in 2011.
Under rules set by the state, the entities that replaced redevelopment agencies are required to submit property management plans to the state before the properties can be sold, Simon said. Officials are required to include price estimates for the land in the property management plans, but the state doesn’t require the estimates to be based on professional appraisals, he said.
Simon described the price estimate as little more than an administrative task needed for the state to allow the land to be sold.
“It’s been suggested that was an offer to sell the property at that price, and that’s not what it was,” Simon said. “It’s not an attempt to say this is what the fair market value is.”
Simon said he doesn’t believe law enforcement officials are targeting RSG, Inc. in their corruption probe. He confirmed that he spoke with an FBI investigator recently, but declined to say in more detail what the conversation was about or more specifically what documents the subpoena is demanding.
“A lot of this is as eye opening to us as it is to everybody else," Simon said. "I’m not familiar with what this is all about and where this is going. Other than what you read in the newspaper."